The Prime Minister’s Office asked the Cabinet Office to provide £150,000 of funding for the Big Society Network despite concerns about the BSN’s performance, according to a report from the National Audit Office.
The report, published today, says that Nick Hurd, the former Minister for Civil Society, agreed to provide the funding for the Big Society Network to operate the Big Society Awards even though his department had concerns about the organisation’s performance.
The report says the Cabinet Office provided £350,000 of grant funding to the BSN to run the Big Society Awards in April 2012 using its powers under the Charities Act, which did not require it run a competitive process.
It says the department subsequently concluded that the BSN had underperformed against many of the objectives for the grant and, when considered against problems there had been with almost £300,000 of funding provided by the department for the children’s fitness project Get In, the Cabinet Office was unsure about renewing the funding for 2013/14.
But it says that the Society Network Foundation, the charity that owns the BSN, had already continued work on the awards after the previous grant period ended, and that the Cabinet Office was not in a position to take over their running.
Cabinet Office officials suggested reducing the grant to £150,000 and sought advice from the Prime Minister’s Office on whether to award this additional funding. The briefing to Number 10 listed sustainability concerns and the poor performance of the Get In programme.
The report says that Cabinet Office officials advised that it "would not be appropriate to grant-fund an organisation that is in financial difficulty or that is struggling to appropriately manage its financial affairs".
It says that Cabinet Office officials were aware that the BSN was late in filing its 2011/12 accounts with Companies House, and they subsequently showed a deficit of £181,000.
It says that the head of campaigns and strategy in the Prime Minister’s office, who is not named, sought advice from the Prime Minister’s Policy Unit and met Steve Moore and Martyn Rose, director and chair of the Society Network Foundation.
"Following this, the Prime Minister’s office asked the Cabinet Office to continue with the new grant funding," the report says. "It also asked it to pay a bridging grant to cover the costs of the Big Society Awards while a memorandum of understanding was agreed for the grant. The Minister for Civil Society decided that the grant should go ahead, but subject to clarity over the key performance indicators. He also noted his concerns at the financial sustainability of the Big Society Network and that he had raised these with Giles Gibbons, a trustee."
The report is the NAO’s second investigation into grants provided to the BSN and the SNF. An an earlier investigation by the spending watchdog found that the Cabinet Office and the Big Lottery Fund had failed to follow procedures in the management of more than £2.1m of other grant funding awarded to the SNF, which is in the process of being wound up.
Today’s report says that it did not find any evidence of systemic issues within the programmes run by the Cabinet Office and the Big Lottery Fund.
The latest report examined four grants, totalling £980,000 and awarded between August 2010 and May 2013 by the Cabinet Office and the innovation body Nesta, at the time a non-departmental part of government, now an independent charity.
A statement issued by the SNF trustees said they were pleased the NAO had concluded its two reviews and that "no evidence of any malpractice has emerged".
The trustees said: "We are satisfied that none ever occurred. Each report has provided honest accounts of how public bodies, our staff and trustees worked to nurture innovative ideas, legitimately submitted, all consistent with our charitable objects.
"We were a new charity operating in challenging times. The opprobrium the charity attracted in the past two years was plainly politically motivated. It undoubtably made it difficult for us to operate effectively. We trust that this report will finally lay to rest the wholly unfounded and damaging accusations that have been made against the charity, its trustees and the people who worked with and on our behalf."
Lisa Nandy, the shadow minister for civil society, said: "The thousands of charities that have had their funding cut will be dismayed to read today’s report and learn that an organisation with strong ties to the Prime Minister was allowed to waste millions of pounds of public money on pet projects.
"The Conservative donors and supporters who ran the Big Society Network were hand in glove with ministers and advisers, who didn’t seem to care the organisation they were writing cheques to hadn’t even filed its accounts.
"Ministers wrote these cheques while denying thousands of legitimate charities a lifeline. At a time when the voluntary sector is struggling to keep its head above water, they should be ashamed of themselves."
Margaret Hodge MP, chair of the Commons Public Accounts Committee, said in a statement it was alarming that the Cabinet Office continued to fund the SNF despite concerns about its performance and financial health.
"It’s hard to believe that government’s decision to renew funding was in the best interests of the taxpayer," she said.
A Cabinet Office spokeswoman said: "This government is committed to backing and providing funding for organisations that encourage people to volunteer and use their talents to help others. We welcome the NAO’s report today, which finds no evidence of any systemic issues with our programmes."